There are 32 investment trusts that would have made investors more than £1 million if they had put their entire Isa allowance into the same trust every year since 1999, the data shows.
According to the Association of Investment Companies, software and technology services investor HgCapital Trust would have provided the highest returns, bringing investors a total of £2.3 million between 1999 and 2023, based on a total investment of £306,560 during the period.
Of course, investing your entire Isa allowance in one place goes against the investment principle of diversification and is not advisable..
However, it is a useful example of which mutual funds have performed well since 1999.
Supporting technology: The three highest-performing investment trusts focus on investing in the technology sector
Isas, or individual savings accounts, protect your savings or investments from taxes on interest, earnings and dividends. In short, Isas are a tax-efficient way to save money.
Currently, the annual Isa allowance is £20,000 per year. This has increased from £10,000 in 1999, which was split between a limit of £7,000 for a shares Isa and £3,000 for a cash Isa.
Cash Isas are available to any UK resident over 16, while Stocks and Shares Isas are available to over 18s.
Jim Strang, Chairman of HgCapital Trust, said: “It is very encouraging that the company has been able to deliver such compelling returns to shareholders over the past 25 years.
“This is a strong endorsement of the private equity model and the skill and experience that the manager, Hg, has employed so successfully over this time.”
The second best performing fund was Allianz Technology Trust, which invests in global technology companies.
For the same investor who had contributed their entire Isa allowance since 1999, they would have made £2.1 million in benefits. Technology investor Polar Capital Technology reportedly returned £1.9 million during the period.
“As we often remind investors, we could say that we live in the golden age of technology, where companies in most industries become relevant or irrelevant depending on their adoption and use of technology,” commented Mike Seidenberg, portfolio manager at Allianz Technology Trust.
The fourth best performing fund, Scottish Mortgage Investment Trust, also invests 21 per cent of its capital in the technology sector and would have made a return of £1.6 million.
However, Scottish Mortgage has proven controversial among investors in recent times due to its exposure to unlisted investments, against the backdrop of a difficult economic environment.
Both Scottish Mortgage and HgCapital invest at least part of their portfolio in unlisted companies.
Scottish Oriental Smaller Companies would have had the fifth highest profitability, at more than £1.5 million.
The trust is one of four Asia-focused trusts to achieve returns of more than £1 million. Of these, both Abrdn Asia Focus and Pacific Horizon Investment Trust were among the top ten performers.
Abrdn’s Asia Focus trust was among the best performers, making returns of more than £1m.
“It has been a difficult time for investors recently, with high inflation coupled with geopolitical tensions and an uncertain outlook,” said Annabel Brodie-Smith, communications director at the Association of Investment Firms.
‘In difficult times, it is important for investors to take a long-term approach to their investments.
“Investment trusts have been around for more than 155 years, surviving two world wars, the Great Depression, the high-inflation era of the 1970s, the technology boom (and bust), the financial crisis and the pandemic.”
Of the 32 best-performing funds, more than a third invest in smaller companies, with four of these companies focusing on the UK sector. BlackRock Throgmorton Trust was the best performer of these, returning £1.2m.
Meanwhile, Scottish Oriental Smaller Companies, Abrdn Asia Focus and Fidelity Asian Values focus on the Asia Pacific smaller companies sector.
Despite the returns these investment trusts offer, it is essential that investors avoid putting all their eggs in one basket to reduce risk.
“When investing, it is vital to spread risk as no one knows which investment trusts will do best in the future,” Brodie-Smith said.
‘A diversified portfolio that meets your needs is the best way to achieve long-term success. If investors have concerns about which trust is right for them, it is important to speak to a financial advisor.’
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